How Many Smartphones?

AdAge's Rita Chang asks the billion dollar question: How Many Smartphones Can the Market Support? She cites an NPD group survey that found about 45% of all cellphone users prefer to only use their phones for making calls (although they can access the Internet and have GPS). 

Right now smartphones make up perhaps 15% of the US handset market. Even though the culture of mobile is evolving rapidly, let's assume the NPD numbers represent a hard limit on market demand. Say, for example, 50% of the market wants a phone to act only as a voice communication device: a phone.

That still leaves 130 million people today in the US who presumably would be interested in doing other things with their phones -- i.e., mobile Internet access.

Cost is the primary factor driving the smartphone market:

  • Handset cost (iPhone 3G sales took off when the price came down to $199)
  • Data plan cost

The more these costs come down the more smartphones will penetrate. Culture will also drive adoption over time: if my friends all have smartphones that do all sorts of great things, so will I. However, low-cost netbooks may cannibalize potential smartphone sales for some people. (Both allow for mobile Internet access.)

We will continue to see more people access the Internet on the go, the question is: how many will be accessing the "mobile Internet." Right now that latter number is about 50 million. Within three years it will likely double. 

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Related: Report -- Intel to support Android-based netbooks.